No excuses. We know you are busy trying to get a busted budget through the Senate. Commiserations. But that sort of fiscal reform is actually only a modest part of the bigger problems facing the Australian economy.

So while the details of Medicare co-payments or work for the dole or family assistance may be significant in themselves, the real risk is that your government is paying insufficient attention to the forces sweeping through the larger world, including Australia. It’s learning how to compete with and succeed against those forces that will actually determine whether Australia thrives or falters.

Certainly the ability of business to respond and innovate and invest is important. But having government set the right direction and strategies – working in collaboration with business and explaining the rationale to the community – is fundamental. Sorry, that just isn’t happening.

Nor is there much sign you even recognise the urgent need for radical change in the country’s approach to all this. Yet we have already wasted too much time – with results of past mismanagement painfully obvious.

It’s certainly not enough to say leave it to the market to work it out – when it will be the global market that does that and it will be domestic jobs and domestic businesses at risk if they aren’t globally competitive. We’ve prepared plenty of research and suggestions about how Australia can manage this better and why it must.

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Sincerely,
Catherine Livingstone
, the Business Council of Australia".

All right, this is merely my precis of Livingstone’s passionate speech this week appealing for a major shift from Australia continuing its business-as-usual model. But it underscores the determination of the business community, if more politely put by Livingstone, to persuade the government to focus on what matters most for the Australian economy.

Sector by sector approach

The BCA, backed by extensive McKinsey & Company research, is arguing the case for specific steps to improve global competitiveness and build on the country’s comparative advantages, sector by sector. In other words, what we can do best.

As Livingstone pointedly says, it’s time to choose between a path of purposeful action or a path of painful adjustment, given those global forces are very different from any before.

“We can’t afford to be complacent about the need to take control of our national destiny. If we don’t take control, our future will unfold by default as a consequence of actions being taken by other countries."

That means, she says, it’s no longer adequate to think being domestically competitive but to adopt a global mindset and the need to operate in a truly global marketplace.

This involves making deliberate strategic choices in the national industry sectors Australia backs via the sort of regulation, support, co-ordination of policies, including competition policy, and incentives to facilitate comparative advantage. It is more nuanced than generic cuts in red tape, for example, or a one-size-fits-all approach.

“The government can pursue $1 billion worth of red-tape reduction but if the reform program isn’t substantive at a sector level, if it doesn’t fundamentally improve our global competitiveness, it is a wasted opportunity," she says. Ouch.

Right questions needed at right time

Instead, she wants a “very different model of policy design, based on a deep understanding of sector dynamics", including where jobs are falling and where being created.

“A good start is for policymakers to ask the right questions for the right reasons at the right time," she says. “Looking back, if we had asked the right questions about the automotive industry in the 1980s and acted purposefully as a consequence, we might have seen companies transition into niche suppliers participating in global supply chains, rather than having to close down."

That of course, exaggerates the ability of any policymakers to foretell the future, not least the rapidity of the rise of China and the revolution it created in global manufacturing. Or dramatic changes in technology creating whole new industries.

But while Livingstone acknowledges the limitations of the research, she says its role is to start a national conversation about what industry competitiveness means.

McKinsey cites the success of New Zealand’s dairy industry, for example, following NZ’s “intent and ambition" by comparison with “the story of squandered potential" in Australia.

Livingstone, who is also chair of
Telstra
, has had a varied career in business, including formerly heading the globally successful Cochlear, as well as the CSIRO. It makes her particularly attuned to this debate.

The McKinsey study says Australia is strongly competitive in only one sector – agriculture. But it has a substantial comparative advantage in others, albeit with declining or flat competitiveness. These include mining and natural gas, tourism, international education, and potentially, niche manufacturing and food and beverage processing.

According to Livingstone, it’s important to ask the right questions. Like how to do better in high-value niche strengths in agriculture? Like whether mining services are using enough data analytics to maintain competitiveness? Like whether Australia can recognise the forces of change and its own potential to succeed?